INVESTMENT FUNDS: COMMISSION WINS SUPPORT FOR PLAN TO UPDATE UCITS LEGISLATION.

The public consultation revealed backing for the Commission's ideas, which include asking regulators to simplify the registration procedure, creating a management company passport and allowing the restructuring of pan-European funds.

"Very often you have the idea that the industry is isolated but we see that most of the issues which are important to us [fund managers] are supported by the broad majority", said Stephan Matthias from the European Fund Management Association (EFAMA).

Industry and consumer interests alike said the Committee of European Securities Regulators (CESR), the Paris-based regulatory group that advises the Commission, should help simplify the registration procedure when a company issues a prospectus, the document that introduces the fund and provides basic information about it. A provision in the Directive allows the CESR to harmonise the content and the format so it is easier to read for investors.

Many also support the idea of having a single passport so a company can manage funds across the EU under a single set of rules. 'Passporting' is essential because it will enable a fund manager living in one EU member state to manage the assets of a fund registered in another member state. Furthermore, it will also enable the fund manager report to one supervisor, instead of having to report to every authority in countries where the fund is registered.

Pooling.

Fund managers also want to be able to regroup funds across the EU through pooling; that is, separating a series of funds available to investors to be able to manage them collectively. For example, an investor may want to separate a wide range of French funds that are grouped to suit an individual investment in France, so he can then place the assets into a "master fund" located in Germany. This will allow the French investor to merge his fund with a German one. However, even if pooling becomes legal, this operation will still be complex and expensive since fund managers need to explain to their investors how their assets are being managed.

The findings of the consultation clearly show that pooling is regarded as more of an expensive alternative for merging funds, and one that is more...